Alistair Darling has been busy telling us how we were going to pay more in pension contributions and that pensions had to fall in line with the rest of the economy, does he mean defined contribution benefits?
For the same reasons, bailing out the bankers, Ireland is going about creating a separate single pension scheme for all new entrants to the public service in a bid to reduce the costs. Reducing costs of running a pension funds is of course a good idea as long as the benefits are good.
The new scheme will be in place by the end of 2010 and will calculate benefits based on "career average" earnings instead of final salary on retirement.
http://www.globalpensions.com/global-pensions/news/1565715/ireland-create-scheme-public-servants
The minister also said the government would review the existing arrangement which sees pensions in payment increases linked to earnings, now that is a threat. We will face similar demands for reform, but what we can see is creating a single fund has cost benefits for employees, its cheaper and more efficient to have one fund.
